Modern business practices utilize many forms of contract and agreements to facilitate the exchange of goods and services. Such agreements memorialize the relationship between two (or more) parties. In a number of areas of business, such agreements and contracts form the basis of business. For example, insurance, reinsurance, annuities, and regulated industries (e.g., stocks, bonds, mortgages, finance, taxation) all depend very heavily on such agreements. Various standards, both qualitative and quantitative, are often applied to review an existing contract or a proposed contract to evaluate the value of a contract.
As the “lifeblood” of many business arrangements, it is often useful for a business entity to evaluate qualitative and quantitative aspects of various agreements or proposed contracts. Such an evaluative process may be referred to as an “audit.” An audit may be valuable to review existing, executed agreements and contracts as well as proposed agreements. Such agreements that may benefit from audits may be referred to herein as “auditable instruments.”
Audits may occur for a variety of purposes. The purpose of an audit is generally to determine if an auditable instrument is in compliance with one or more criteria. Criteria may range from the very simple to the extremely complex. For example, a criterion may be as simple as a mathematical test, comparing a numeric value to a desired threshold. Other criteria may be very complex and require volumes of regulations to properly define.
As presently practiced in the prior art, audits are generally manual procedures prone to human induced error and inconsistency. In general, an auditor of such agreements will determine the specific type of contract to be reviewed. Based on this determination, the auditor will determine from his/her personal expertise what standards are important to the quality of such a contract. The auditor will then review the agreement with those standards (e.g., criteria) in mind to determine the degree of compliance of the agreement with those standards. Different auditors may apply different standards to review of similar agreements. Or, one auditor may apply different standards over time to similar contracts. Important criteria may be mistakenly ignored in audits of agreements. Still further, auditors may vary their perspective of the relative importance of certain criteria with respect to other criteria. One standard or criteria may be adjudged more important in the process by one auditor as compared to another auditor. Or, one auditor may vary the relative importance of criteria over time.
Such human variability can be reduced by supplying standardized scripts of criteria applicable to each type of auditable instrument. Such a standardized script may also aid the human auditor in consistently applying the same relative weight to each criterion. Human auditors may none-the-less fail to adhere to the standardized scripts of audit criteria or may erroneously apply the scripted standard questions and weights.
Computing systems and other automation have been generally applied to automated testing and evaluation systems. However, as presently practiced, such automated testing and evaluation techniques do not provide flexibility in the selection criteria to be adjudged nor in the weighting of various criteria relative to one another. Further, though computing and automated system have been generally applied to such testing and evaluative processes, automation has not heretofore been applied to the audit of auditable instruments in a business relationship context.